Govt asks State Bank to address SME credit crisis

The government on Saturday directed the State Bank of Pakistan (SBP) to resolve the credit crisis being faced by small and medium enterprises (SMEs) as they need financing to sustain their operations as well as give a fresh push to their businesses.

Representatives from the medium-sized enterprises have called for a shift from the normal tax regime to the fixed tax system, citing the need for a simpler and more predictable taxation framework. Expressing dismay at taxation and high energy costs, the SMEs argue that they have no easy access to funding to grow their businesses.

In Pakistan, small businesses have long been struggling to survive as big enterprises dominate while crushing the small ones. Large companies gain access to power corridors and are able to get their issues resolved whereas successive governments have not taken care of small units. Experts say that small businesses, which are considered a core sector of any world economy, are being gradually wiped out.

Recognising the high importance of SMEs, the current government claims that it is undertaking measures to address their challenges, including bringing tax reforms, curbing energy costs, providing bank credit and ensuring export competitiveness.

Special Assistant to the Prime Minister on Industries and Production Haroon Akhtar Khan held an in-depth meeting on Saturday with the Sialkot Small and Medium Enterprise Cluster. The meeting was attended by Additional Secretary Industries and Production Asad Islam Mahni, acting Small and Medium Enterprises Development Authority (Smeda) CEO Nadia J Seth and representatives of the Sialkot Chamber of Commerce & Industry.

Meeting participants discussed in detail the major challenges faced by micro, small and medium enterprises, which the PM aide described as "the engine of Pakistan's economy".

The Sialkot SME delegation highlighted high electricity prices and limited banking support as major obstacles to business growth. They also raised concerns over the difficulties faced by the surgical instrument industry, noting that the absence of an accreditation laboratory was severely affecting Pakistan's exports. "Non-accredited surgical instruments are not accepted in global markets," they stressed.

Haroon Akhtar informed them that the government was actively working to introduce a fixed tax regime for SMEs. He announced a new incentive package based on electricity consumption, under which power tariffs would decrease as industrial units consume more units. To address the surgical instrument industry's concerns, the special assistant directed Smeda and the Trade Development Authority of Pakistan to jointly develop a strategy for establishing proper accreditation facilities. He emphasised the need for upgrading existing laboratories to meet international certification standards.

Haroon Akhtar noted that Sialkot SMEs possess export potential worth billions of dollars, but their growth is hindered by difficulties in obtaining credit lines from banks. He issued instructions to Smeda and the State Bank to resolve the credit access issues on a priority basis. Highlighting Smeda's vital role in national economic development, he stated that SMEs must be transformed into dollar-generating enterprises. He also asked Smeda to prepare a comprehensive plan and present concrete results in the upcoming review meeting.